Correlation Between First Eagle and Davis Opportunity
Can any of the company-specific risk be diversified away by investing in both First Eagle and Davis Opportunity at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining First Eagle and Davis Opportunity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Eagle Gold and Davis Opportunity, you can compare the effects of market volatilities on First Eagle and Davis Opportunity and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in First Eagle with a short position of Davis Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Eagle and Davis Opportunity.
Diversification Opportunities for First Eagle and Davis Opportunity
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between First and Davis is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding First Eagle Gold and Davis Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Davis Opportunity and First Eagle is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on First Eagle Gold are associated (or correlated) with Davis Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Davis Opportunity has no effect on the direction of First Eagle i.e., First Eagle and Davis Opportunity go up and down completely randomly.
Pair Corralation between First Eagle and Davis Opportunity
Assuming the 90 days horizon First Eagle Gold is expected to generate 1.65 times more return on investment than Davis Opportunity. However, First Eagle is 1.65 times more volatile than Davis Opportunity. It trades about 0.55 of its potential returns per unit of risk. Davis Opportunity is currently generating about 0.32 per unit of risk. If you would invest 2,346 in First Eagle Gold on November 8, 2024 and sell it today you would earn a total of 346.00 from holding First Eagle Gold or generate 14.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
First Eagle Gold vs. Davis Opportunity
Performance |
| Timeline |
| First Eagle Gold |
| Davis Opportunity |
First Eagle and Davis Opportunity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Eagle and Davis Opportunity
The main advantage of trading using opposite First Eagle and Davis Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Eagle position performs unexpectedly, Davis Opportunity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Davis Opportunity will offset losses from the drop in Davis Opportunity's long position.| First Eagle vs. First Eagle Gold | First Eagle vs. First Eagle Gold | First Eagle vs. Franklin Gold Precious | First Eagle vs. First Eagle Global |
| Davis Opportunity vs. Ftufox | Davis Opportunity vs. Small Pany Growth | Davis Opportunity vs. Ffcdax | Davis Opportunity vs. Fwnhtx |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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